These 4 REITs have been beating the S&P 500 for years and should continue to do so

The stock market has been plagued with a plethora of bad news and challenges of late, including rising inflation and interest rates, supply chain uncertainty amid an ongoing pandemic and the war in Ukraine to name a few. Shelters from this financial storm seem scarce as even the most reliable publicly traded stocks have suffered severe downturns.

At least for now.

Long history, at least as far as US stock markets are concerned, shows that what goes down will eventually go up, and now is the time to look for future winners.

Person looking intently at numbers on a screen.

Image source: Getty Images.

A good place to start that search might be with these four real estate investment trusts (REITs) that have impressive records beating the S&P 500 total return over the years. They also have current portfolios that should continue to pump dividend income during this downturn and are in sectors that should lead the way when money returns to the market in enough volume to drive prices up again.

They are Equinix (EQIX 4.75% in data centers, logistics rental company First Industrial Realty Trust (FR 2.65%specialist in mobile infrastructure Crown Castle International (CCI 2.58%and self-storage giant Extra storage space (EXR 2.43%

Conventional investment wisdom holds that just buying an S&P 500 index fund and holding onto it will build more wealth than what the average investor can pick and choose for themselves. But these aren’t just average performers. Over the past 10 years, the S&P 500 has returned 258.6%. Extra Space Storage has nearly tripled that and the other three have easily outperformed that key market index as well.

FR Chart Total Return Level

FR Total Return Level Data by YCharts

Four REITs outstanding in their respective domains

Equinix is ​​one of the few data center owners that has not been acquired, and it is the largest REIT of its kind, with more than 220 facilities in more than 60 markets on five continents. It has also increased its dividend for seven consecutive years and is now yielding about 1.98%.

Extra Space Storage holds the money from a growing portfolio of 2,130 stores, making it the second largest owner/operator and largest third-party self-storage management company in the country. The stock is now returning about 3.54% after 14 consecutive years of dividend hikes, including a 10.23% increase over the past three years.

Crown Castle is the second largest owner of cellular towers in the United States, making a strong move to small-node networks and the fiber-optic cable infrastructure needed to capitalize on the growth of 5G networks. Crown Castle has increased its payout by 8.5% over the past three years, giving it a current return of around 3.35%.

First Industrial has a portfolio of 434 buildings in key distribution centers across the country, serves nearly 1,000 customers in its red-hot warehouse space, and has increased its dividend nine years in a row, including by 7.47% in the past three, and is now with a yield of about 2.27%.

Beat up makes for beckoning purchases

All four of these stocks are currently beaten even more than the S&P 500, which is down about 17% so far in 2022. Crown Castle’s share price is down about 17% so far, followed by First Industrial by 21. %, Extra Space Storage at 22% and Equinix at 25% at the time of writing.

For me, these are buying opportunities. All four of these REITs have many of those characteristics of a buy-and-hold company, including large and growing addressable markets and canals around their companies.

They also all have the portfolios and strategies that give confidence in the idea that they will resume their market-beating fashion once the general market starts its own rally. That tide will of course lift most boats, and these companies will likely rise above the crowd again.

Leave a Comment